Shares of Acadia Pharmaceuticals toppled Wednesday after the biotech company's experimental treatment for a rare, genetic disorder failed in Phase 3 testing.
Analysts largely expected the drug, dubbed carbetocin, to miss its mark in patients with Prader-Willi syndrome. In this condition, a deletion or mutation of a specific gene causes physical, intellectual, developmental and behavioral symptoms. Acadia intended for its drug to treat excessive hunger associated with PWS.
In earlier testing, carbetocin showed inverse dosing effects — meaning higher doses didn't lead to a better response, RBC Capital Markets analyst Brian Abrahams said in a report.
"We do not believe many on the Street expected the drug to work (though we sensed some concern that expectations had increased given the stock's recent strength)," he said. "As such, we anticipate limited downside on the news."
Acadia Pharmaceuticals stock tumbled 9.9% on today's stock market, ending the regular session at 21.26. The news is a boon for Soleno Therapeutics, however. Soleno is working on a PWS drug and its shares rocketed 13.5% to 64.50.
Acadia Pharmaceuticals' 12-Week Test
Acadia said it's scrapping any further development of carbetocin. Over the course of a 12-week study, patients who received carbetocin didn't show a statistically significant improvement vs. the placebo group on a questionnaire focused on hyperphagia, or excessive hunger.
Still, the company says it's well positioned for long-term growth with two approved products likely to hit $1 billion in net sales this year. The company also has a pipeline of eight disclosed and multiple undisclosed programs, Chief Executive Catherine Owen Adams said in a written statement.
RBC's Abrahams called the slide for Acadia Pharmaceuticals stock "an opportune time to buy into the stock ahead of what we believe is an intriguing setup." The company is working on a treatment for Alzheimer's disease psychosis.
"We believe there is limited value being placed on ACAD's pipeline at current level, further improving that setup," he said.
He kept his outperform rating and 40 price target on shares.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
